Real Estate Matters
By Elisa Jo Eagan
Each real estate transaction comes with its own set of challenges, but buying and selling a home at the same time compounds these challenges. The addition of time constraints and another set of buyers and sellers increases the need for appropriate expectations, patience and perseverance. Proper planning and preparation are key to a successful conclusion for both transactions.
Planning Ahead
You have heard people say, “The destination is not as important as the journey.” However, in the case of buying and selling a home at the same time, in many ways the opposite is true. It is important for you to keep the end goal in mind while at the same time, detaching a bit from the process. There will no doubt be bumps in the road; the less you focus on those the better.
Building a Great Team
Building a great team will help you put together a successful plan for your sale and purchase. What follows is a list of the professionals you will be working with. Communicate with them early on and often to keep your process moving forward toward the finish line.
Real Estate Agent
Your real estate agent can help you develop a clear idea of your needs and expectations for the process. Everything will be time-sensitive, but if you are under severe time pressure, it is important to be very clear about your timeline. If your purchase will be out of the area in another market or out of state, allow your agent to refer you to a qualified agent in the new area where you will be relocating. Their coordination and cooperation will be vital to the smooth running of the process.
Pricing Your Current Home
Of course, you will want to sell your current home for the highest possible price as quickly as possible. That means that you will need to right-price your current home.
Most home buyers typically search for homes in pricing increments of $25,000 to $50,000. If it is suggested that the approximate value of your home is up to $400,000 or $500,000, for example, you would be best to list at or under that price. This will create increased buyer interest and activity, and it will, in most cases, get closer to or at asking price. In many cases, depending on your specific home and location, you may get offers over your asking price, getting you top dollar for your home. Talk to your real estate agent about a price that is fair, but also encourages buyer interest and enthusiasm.
Searching for Your New Home
You will want to keep your timeline in mind when searching for your new home. That may mean that you will need to put more time into your home search or be a bit more flexible in your requirements. If you are looking to sell your current home and buy and/or build your dream home, you may want to put in place a longer process with a stopover into a short-term rental property to buy you some extra time.
Working with Your Lender
You will need to spend time talking with your lender about the way your financing will work during the time you are freeing up the money from the sale of your current home to purchase your new one. Depending on your financial situation, you may need to close on your current home before initiating financing on your next home, or you may be able to qualify for both mortgage loans simultaneously.
There are loan products available that can help you obtain the equity of your current home in order to move forward to purchase your new home, and then pay the temporary “bridge” loan off when you close. While this may make the transition possible, it can also put you in a bind if the sale of your current home falls through or is delayed. Talk these scenarios over with your lender and your real estate agent about your risk tolerance in this regard, and find out which option will work best for you.
Working with Your Title Company
Depending on the location of the two properties, you may be able to close at the same title company on both your sale and purchase. Alternatively, you may be able to conduct closing by having the closing documents sent to you by mail to be signed and notarized for your convenience.
Working with Your Movers
Unlike a standard move, you may need to have your household goods packed and stored for a while before they arrive at your new home. You may need to have a portion of your items stored, and a portion of your items moved to a short-term rental. Talk to your movers about your options so they can help you determine the most cost-effective and efficient way of facilitating the particulars of your move.
Short-Term Lease Options
You may have visions of a same-day sale and purchase. While this does happen, it requires everything to proceed perfectly with the buyers and sellers on both sides of two different transactions, as well as with both of the lenders involved. Just in case this does not occur, it is a smart idea to put a backup plan into place. If you need more time between closings you may want to rent month to month or stay in a short-term rental that is furnished while your personal belongings are stored until your new home is ready for your occupancy.
Rent Back Your Current Home
If you know when your new home will be ready for you, it may be a possibility to negotiate a rent-back, also known as a use and occupancy agreement, on your current home that you are selling. This can be done as a courtesy to you from the buyers of your home for a period of one day, one week, one month, or for several months, depending on your needs and the flexibility and preferences of the buyers you are working with that are purchasing your home.
The goal is to make buying and selling at the same time a successful, seamless move based on your individual wants and needs.
For real estate information and advice, contact Elisa Jo Eagan, the “Real Estate Godmother,” at 609-703-0432. Learn more at www.TheRealEstateGodmother.com.
For More Real Estate Questions, Information and Advice Contact Elisa Jo Eagan “The Real Estate Godmother” (609)703-0432 and Remember…”There’s No Place Like Owning Your Own Home!”
